* Euro gains broadly, recovers from 10-month low
* Euro zone leaders agree Greece safety net, includes IMF * Uncertainties remain; euro down 6.6 pct vs dlr in 2010
(Recasts, adds comments; changes dateline, previous LONDON and byline)
By Vivianne Rodrigues
NEW YORK, March 26 (Reuters) - The euro rose broadly on Friday after euro zone leaders agreed on a safety net for Greece, though uncertainties remained over the country's debt sustainability.
Euro zone leaders agreed on an aid package under which Greece would receive both bilateral loans from euro zone partners and funding from the International Monetary Fund if it faced severe difficulties. [ID:nLDE62N2R1]
But the plan did not alleviate longer-term worries about Greece and other fiscally vulnerable economies in the region, such as Portugal and Spain, limiting euro gains.
Analysts said the package is limited because it only offers funding as a last resort and only with unanimous euro zone approval.
The package "reduces some of the biggest risks on Greece and we are obviously seeing the euro respond to that," said Daniel, Katzive, a director for global foreign exchange at Credit Suisse, in New York.
"But ultimately, the markets remain apprehensive over their fiscal situation and it will be hard for the euro to gain real traction against the dollar in the short term," he said.
Greece is saddled with borrowing costs more than double those of Germany and must borrow some 16 billion euros ($21.3 billion) between April 20 and May 23 to refinance maturing debt.
In morning trading in New York, the euro
In the United States, the dollar had a limited reaction to a government report showing the country's economy grew at a slightly less brisk pace than previously estimated in the fourth quarter. [ID:nCLAQEE608]
The dollar index <.DXY>, a measure of its performance against six other major currencies, fell 0.2 percent to 81.932.
The greenback struck its highest level since early January
against the yen on Thursday at 92.96 yen
Meanwhile, the euro advanced 0.8 percent to 124.03 yen
LINGERING DOUBTS
Concerns about Greece's fiscal health have caused the euro to lose more than 6 percent versus the dollar this year and despite the potential aid, the currency is likely to resume declines.
"This buys the euro a bit of time, but nothing fundamental has changed and Greece still has to roll over its debt," said Michael Hewson, an analyst at CMC Markets, in London.
Hewson said the previous support around $1.3480 had become a significant resistance level. A weekly close below here would "reinforce a downside trend in euro/dollar, potentially taking it down toward $1.3000," he said.
European Central Bank President Jean-Claude Trichet on Thursday said the aid mechanism was "workable" although it was unlikely ever to be activated. [ID:nLDE62O2MJ]
Some analysts said the IMF's involvement could speed up Greece's fiscal reconstruction, although others said the deal's extremely strict conditions could harm the Greek economy. "Going forward the market will be focusing more on whether Greece will be able to deliver the austerity measures it has promised," said Johan Javeus, currency strategist at SEB in Stockholm.
The euro gained 0.5 percent against sterling
(Additional reporting by Jessica Mortimer in London) (Editing by Theodore d'Afflisio)